Introduction to the integrity audit management Presentation by Mr. John Heck 发言人：约翰 · 赫克 Senior Expert, The Netherlands 荷兰高级专家 China-Europe Public Administration

China-Europe Public Administration Project (CEPA II)

Introduction to the integrity audit management

Presentation by Mr. John Heck发言人：约翰 · 赫克

Senior Expert, The Netherlands荷兰高级专家


Learning points

• General understanding of the Integrity Audit Management concept;

• Improved ability to implement the Integrity Audit (self-assessment);


Livecycle of integrity approach

1. Ignoring / denying the problem 2. Awareness / ‘wake-up call’

– (external forces / incidents)

3. Hard-line approach: Repression– (criminal) law and regulations – investigation / punishment

4. Recognition of limitations of repression only 5. Focus on prevention / integrity approach

– ‘hard controls’ (internal controls, security, ...) – ‘soft controls’ (culture, management attitude, ...)

6. Balanced approach: prevention / repression


History

CEPA II:• 2012: “Practical Guide for public officials on ethics

management” developed, introducing the concept of integrity, integrity policy and principles in the public sector (EU practices).

• 2013: “Structured mechanism on integrity management (guideline) for a public service organisation” developed;

• 2014: Implementation guidelines developed and tested.


Characteristics Integrity Audit

• Preventive examination:– Not to test personal integrity of employees, but to identify

vulnerable spots:• related to vulnerabilities of positions• related to vulnerabilities superseding the positions

• Not a financial audit(verification of financial statements/spending lawful);

• Focus on vulnerable processes and positions:– Aimed at improvements

• Self-examination:– Do it yourself

• Implementation in phases.


Position related vulnerable activities

• Money (e.g. allocation of budgets, collection, payments)• Supervisor finance, cashier

• Supervision (e.g. status, expertise)• Managers

• Goods and services (e.g. purchase, procurements)• Employee procurement

• Confidential information (e.g. handling documents, access data bases)

• IT manager, Archive

• Permits, applications (e.g. issuing, authorization)• Section chief on insurance applications

• Enforcement (e.g. monitoring, checks)• Inspectors, auditors


Organisational vulnerabilities

• Selection, recruitment staff• Division of tasks/responsibilities/authority not

clearly defined• Implementation processes by always the same

person• External contacts employees• Gifts• Secondary activities• Assests declaration


项目的三个阶段

A 阶段确定薄弱活动

介绍会议诚信控制团队

诚信控制团队与高级管理层见面

高级管理层提出薄弱活动概述

诚信控制团队与高级管理层面谈

A 阶段的批准报告

B 阶段评估现有抵御能力

- 诚信控制团队检查现有薄弱环节保护情况：

- 是否存在规定和政策问题；- 这些规定的质量；

- 对规定的意识和遵守。

确立事实风险

B 阶段的批准报告

C 阶段向管理层提出建议

诚信控制团队针对实施诚信缺失风险向管

理层提出建议

- 将结果写入批准的执行计划；

- 确保持续意识的安排；

- 后续诚信控制管理。

所有相关方召开最终会议，批准最终诚信

控制报告。


Phase A: Identifying priority sectors, “hot spots”

• (Top) management provides inventory of vulnerable processes, the positions involved and/or function related vulnerable activities and organizational vulnerabilities;

• Means: identifying risks of integrity violatons within the organisation;

• Collection of information: stock-taking;


Phase B: Analyse, map and assess resistance capability: the factual risks

Review and assess whether:1. the vulnerabilities are covered by measures,

regulations, provisions 2. the quality of these is sufficient (see also the

performance indicators in the document “Structured Mechanism on Integrity Management for a PSO)”;

3. the employees actually are familiar with these and whether these are applied;


Integrity infrastructure

IntegrityInfra

Role senior management

StandardsValues

RulesProcesses

HRPersonnel

policy

Evaluation and

Reports

Incidents


Phase C: Recommendations

Recommendations to management to minimize the risks:

– as a result from the integrity audit: improve quality of rules, regulations, policy and enhance awareness of same;

– institutionalize the above;– keep the policy and rules and regulations updated.


IMPLEMENTATION


Implementation guidelines forTian Shui Bureau of Social Security

7 Departments

Administrative Department

Talent Center

The Fund Management Center of Social Insurance

The Medical Insurance Center

The Employment Service Center

The Labor Office of People’s Government

The Technology Training School

7 units 7 units

33 positions: management & staff

33positions:management & staff


Phase 1Management

1. Basic information about the Bureau and Departments by indicating the main features of the organization;2. Identify vulnerable processes, activities and positions in each Unit;3. Analysis vulnerable activities and positions the possible risks for integrity violations of each vulnerable activity;4. Determine what type of control measure (regulation, instruction) should be in place for each position;5. What is important to ensure the effectiveness of the measures aimed at making the vulnerable positions more resilient.


Fund management Center of Social Insurance, Phase 1 Establishing reference framework :

Matrix 1Process (activities) in Department Units

Vulnerable activities

Vulnerable positions

Unit Existing measure (regulations, instructions)

-Registration of life insurance work; -Registration of individual account of life insurance people;- ;- :

Examples:-the life insurance qualification checking;

Unit staff, section chief, director.

Life insurance Unit.Examples-checking, ratify, monitor public retirement system of the enterprise for the retired people;

About further standardize the implementation of endowment insurance work in Gansu province (2006/87).

Conditions: Service Specifications on Human Resources Security Windows


Medical Insurance CenterProcess (main activities) in the Department Units

Vulnerable activities

Vulnerable positions

Unit Existing measure (regulations, instructions)

-Auditing the administrative medical insurance expenses; Administrative units and civil servants’ medical insurance applications- ;- :

Examples:-Medical insurance auditing-Medical insurance payment checking

Unit staff, section chief, director.

Administrative Medical Insurance Unit.

Tian Shui city and town workers’ medical insurance regulation (2009/87

Conditions: Service Specifications on Human Resources Security Windows


Risk matrix

Probability

High

Middle

Low

Low Middle High

Impact

X


Social Insurance Departmentvulnerable activities

• Life insurance auditing • Insurance application checking• Life insurance qualification checking• Unemployment insurance auditing• Unemployment insurance qualification

checking


Report Phase 1

• Should at least give insight in:• Which vulnerable activities are implemented

within the Department;• Which positions are involved;• Which vulnerabilities are considered most

important and why.


Phases Step 2• Organise meeting to refine the output of Phase 1;• Deputy Director and Section Chief receives an overview (matrix

Phase 1) of the desired situation regarding the control measures (regulations, instructions) aimed at the vulnerable positions within his or her Unit.

• Before the meeting the Deputy Directors and Section Chiefs have indicated at least 3 and up to 5 most vulnerable positions, which will be reviewed and assessed (all positions will be covered but the selected positions will be discussed in more detail).

• Determine which additional measures should be taken to bridge the gap between ideal situation and the current situation.


Phase 2: Matrix 2Review, assess current measures

Processes in Units---

VulnerableActivities--

Vulnerable positions(indicate top 3 most vulnerable positions)----

Existent measure, regulation, instruction--

Measuretaken(effective?quality to standard? )

Additional measures

-

ConditionsRef: Service specifications on HR and SS Window Units

Conditions present?

Additional conditions required

E.g. Are the responsibilities clearly defined?


Report Phase 2

• Have rules, regulations been formulated for all vulnerabilities?

• Is the quality of these sufficient?• Does the staff know the existence of the

relevant regulations?• Does the staff know the purpose of the

regulations?


Quality Performance indicators

Performance: What is the quality?E.g. there is excellent resistance on function descriptions when

– Function descriptions are defined for all employees;– Each employee has a personal copy of his/her function

description;– Function descriptions indicte all the duties performed;– Existing working conditions are indicated.


Example: Procurement• Has the organisation been informed about the procurement rules?

• Are agreements with suppliers about prices documented?

• Does the Administrative Organisation provide for regular checks on the performances of the supplier (control of invoices, orders, receipt of goods)?

• Do procurement contracts provide for a description of conditions and norms?

• Is there an overview on potential and black listed suppliers?

• Are selection criteria clearly formulated?

• Is always more than one supplier involved?

• Who are involved in the final selection process of the supplier?


Example performance indicator on gifts

• There is excellent resistance regarding gifts, if there is clarity about

• The maximum value;

• How to deal with dinner invitations, study trips, etc.;

• Whether it is allowed to accept gifts at home;

• Which gifts may be kept or hand over to the Department;

• What to do with gifts which are in conflict with the above mentioned rules.


Example: Security

• Adequate physical security available (registration visitors, etc.);

• Norms, regulation on document security available;

• Regulations for private use of goods available;• Registration of valuable good available.


Report Phase 3 Action Plan

• The report of phase 3 can be related to:• The lack of regulations, other relevant provisions

(conditions);• Insufficient quality, applicability of the regulations;• Staff not familiar with the regulations, measures.• The action plan sets clear objectives, timelines and

the sequences in which specific goals should be accomplished.


Phase 3: Example Health Recommendations

• Vulnerable process: granting of permits, controlling and registration activities and keeping registers under the Law for the Medicines and Pharmacies;

• Measures/Recommendations: – Permits granting

• Quality Internal rules

– Controlling• Inspectors only in a team• Obligatory audit, implementation control plans


Phase 3: Example Health Recommendations

• Vunerable process: procedures for awarding public procurements for supply of medical technical equipment, medical products;

• Measures/Recommendations:– Application inner rules for preparation public

procurements, containing detailed description of all processes;

– Involvement outside experts in process of elaboration of tender dossiers and technical specifications.


Phase 3: Action PlanNo Objectives No Actions Deadline Responsible

1 Optimizing the conditions for making the vulnerable positions more resilient.

1.1 Carrying out regular surveys for measuring corruption risks and for preventing and counteraction of integrity violations

Annually Director

2 To improve the conditions: strengthening the administrative capacity on integrity management through training

2.1 Carry out a training needs assessment


PROGRAMMING


Programme for further implementation Phases

Phase 1

No Measure Responsible Deadline Performance indicator

Status

1 Indicate tasks and responsibilities of the Departments

Directors of the Departments

25.04.14 Organizational chart and related responsibilities and tasks available.

Done

2 Identify vulnerable activities with corresponding positions


Number of vulnerable activities and positions.

First indication on 25.04.14


Indicators

• The status or process indicators show whether the various elements of integrity management have been implemented in full, partly or not (yet).

• Performance indicators to determine the extent to which the necessary aspects of a particular desired integrity measure or policy are actual and sufficiently present, or to assess progress.


No Phase 1: Measure Responsible Term/deadline

Performance indicator

Status

1.1 Indicating tasks and responsibilities of the Department of Social Security and the Department of Medical Insurance


25.04.14 Organizational chart and related responsibilities and tasks available.

Done(Annexes 5, 6,7)

1.2 Identify vulnerable activities with corresponding positions


Number of vulnerable activities and positions.

First indication on 25.04.14 (Annexes 8 and 9)

1.3 Indicate the risks of the vulnerable activities and positions


Number of risks detected.

1.4 Determine which type of control measure should be available for each vulnerable activity and position (source: Regulations, instructions, others)


Relevant rules and regulations identified.

1.5 Indicate the requirements for ensuring effective management of the control measures.(Ref: Service Specifications on human Resources Security Windows)

Directors of the Departments + Deputy Directors

Internal survey on requirements for effective management of control measuresavailable.


Phase 2

• Identification and inventory of areas, processes, related positions which are potentially vulnerable to integrity violations;

• Indicate the level of vulnerability (1-3)• Prioritize corruption prone processes;• Identify of possible counteracting measures

for minimizing the risks in the 3 most vulnerable areas, and indicate how.


No Phase 2: Measure Responsible Term/deadline Performance indicator

Status

2.1 Organise internal meeting to review the results of Phase 1

Director,Deputy Directors and Section Chiefs

Overview results of meeting with management on the results of Phase 1 available.

2.2 Prioritize the most vulnerable activities and corresponding positions


Number of vulnerable activities and positions analysed. Definite number of most vulnerable activities and positioned indicated.

2.3 Assess the quality of the current control measures (regulations, rules, instructions)


Result of survey on quality and effectiveness of control measures available. List of the relevant participants in the assessment.

2.4 Draft deliverables Phase 2..

Directors of the Departments in cooperation with Deputy Directors and Section Chiefs

30.06.2014 Report findings phase 2 available; Filled in matrix phase 2 for each Department available. Number of revealed shortcomings in the assessment report.


Programming the main outputs

• 30.05.14 Report phase 1 drafted (filled in matrix for each Department);

• 30.06.14 Report phase 2 (filled in matrix for each Department, revealed shortcomings in the assessment report)

• 31.07.14 Action Plan adopted.


Other topics

• How to enhance staff consciousness of integrity• How to prevent weak points, how to resist it

happening?– Integrity audit– Performance measurement– Transparency, openness

• How to manage implementation?– Policy plan on integrity– Planning & review cycle

• ?


Transparency InternationalPerceived level of public sector corruption

177 countries in 2013

10 least corruptiveDenmarkNew ZealandFinlandSwedenNorwaySingaporeSwitzerlandNetherlandsAustraliaCanada

US:19China 80India: 94Russia: 127

10 most corruptiveYemen SyriaTurkmenistanUzbekistanIraqLybiaSouth Sudan SudanAfghanistanNorth KoreaSomalia

Support to Key Accountability Institutions in South Sudan (CBTF 2 E TA 024)

Corporate governance codepublic-private initiative

• Confined to companies quoted on the stock exchange;

• The code requires, for example, that a Commissioner should have no more than five different positions, directors are only appointed for a term of four years and the ' golden handshake ' can be up to one year's salary;

• Listed companies must in the annual report if the code rules apply, and if not, why not;

• This ' comply or explain ' rule is laid down by law.


People

Vulnerability of people

System

Vulnerability of organisations

Moral based Rule based


Support to Key Accountability Institutions in South Sudan (CBTF 2 E TA 024)

Baseline measurement

What is/should be available in public organisations?• Integrity policy (planning cycle)• Evaluation policy (annual report)• Risk analysis (audit vulnerabilities, positions and processes)• Code of Conduct (consequences of offences)• Registration notification (whistle blowers protection)• Registration integrity breaches and reporting• Procedures internal investigation• External Reporting • Registration (disciplinary) sanctions


Number of integrity breaches(2010 Central Administration NL)

Type Suspected Valid

Financial breaches 138 118

Abuse position, conflict of interest

59 27

Leaks, abuse of info 71 44

Abuse of authority 27 22

Abuse of authority to use force

7 4

Undesired manners 188 54

Private time misconduct 55 39

Abuse of public resources 408 257

Violations against whistleblowers regulations

6 1

Total 959 566


Disciplinary sanctions(2010)

Type Number

Written reprimand 132

Termination of Employment 97

Shorten holiday period 40

Financial settlement 48

Function transfer 14

Others 15

Total 346


Integrity policy planAuthor: Version: Approved by: Date: Validity (duration):• 1. Vision

– Objectives– Vision on integrity– Starting points– Commitment (top) management

• 2. Values and norms– Core values organization– Code of conduct– List of relevant regulations, administrative orders, etc.

• 3. Structure, culture and measures– Internal organization related to integrity– Administrative organization– Information on integrity measures taken, to be taken, e.g. number of trainings

• 4. Integrity violations– Records– Procedures


Dilemma Training

• You work in the Department that selects and recruit new employees. Your newly graduated daughter applied at the same organisation you are working.

• Do you raise this issue internally?


Dilemma Training

• You come across a large pile of colour prints of your colleague’s holiday photos lying on the photocopier.

• Do you say anything about this?


A balanced Integrity PolicyCompliance Stimulation

Organisation oriented-integrity

Morally defensible organisational structure

Sense of responsibility

Person oriented integrity

Selection of personnel and personnel policy

Moral competence


Core values good governance

• Rule of Law;• Impartiality/Objectivity;• Transparency/openness;• Accountability;• Professionalism;• Duty of Care;• Reliability ("confidence, trust");• Courtesy (service principle).Corruption undermines this all


Again the vulnerable areas:

• Money• Procurement• Goods and services• Confidential information• Issuing of permits• EnforcementYou need to list the functions/positions and interviewees.

Documents

Introduction to the integrity audit management Presentation by Mr. John Heck 发言人：约翰 · 赫克 Senior Expert, The Netherlands 荷兰高级专家 China-Europe Public Administration